I’m Professor and Chair of the Department of Economics at LIU Post in New York. I’ve published several articles in professional journals and magazines, including Barron’s, The New York Times, Japan Times, Newsday, Plain Dealer, Edge Singapore, European Management Review, Management International Review, and Journal of Risk and Insurance. I’ve have also published several books, including Collective Entrepreneurship, The Ten Golden Rules, WOM and Buzz Marketing, Business Strategy in a Semiglobal Economy, China’s Challenge: Imitation or Innovation in International Business, and New Emerging Japanese Economy: Opportunity and Strategy for World Business. I’ve traveled extensively throughout the world giving lectures and seminars for private and government organizations, including Beijing Academy of Social Science, Nagoya University, Tokyo Science University, Keimung University, University of Adelaide, Saint Gallen University, Duisburg University, University of Edinburgh, and Athens University of Economics and Business. Interests: Global markets, business, investment strategy, personal success.

Diageo, Yum Brands, And P&G -- One Winning Strategy

Diageo (NYSE:DEO), Yum Brands (NYSE:YUM), and P&G (NYSE:PG) are in different businesses but they have one thing in common: they have all been successful in expanding their overseas presence.

What is the secret of their success? How did they do it?

Two ways. First, by recognizing that the world economy is a diverse market which includes three segments — a pure global segment, a pure localized segment, and a semiglobal segment.

Second, by devising value propositions that include the right mix of global and local product characteristics to address the peculiarities and specificities of each market segment. In this way, the three companies have avoided the pseudo-dilemma (globalization or localization) which has proved to be costly for other companies.

Beverage maker Diageo mixes global drinks with local drinks and liquors to create product offerings that cater to local markets. Diageo’s Gordon Edge, a mix of gin and lemon, caters to the UK market. Meanwhile Safari Luna, a mixed of fruit and liquor, caters to the Netherlands.

Allied Domecq’s Presidente brandy and cola mix caters to the Mexican market, while TG — a mix of Scotch and guanana — caters to the Brazilian market. Campari’s Mixx, a mix of grapefruit and Campari, caters to the Italian and Swiss market.

In some cases, Diageo has localized marketing to promote local brands, as is the case with its Bulliet brand, marketed to local bars. “By restricting ad spending and selling only to select bars, Diageo aimed to create an independent, hipster aura around Bulleit,” writes Wall Street’sPeter Evans. “The plan worked: Buoyed by the renaissance in bourbon and with a growing following in the cocktail trade, sales of Bulleit have increased fivefold in the past three years, largely through “on-trade” sales in bars.”

This localized strategy is in sharp contrast to the globalized strategy for the company’s major brands, like Smirnoff, Johnnie Walker and Guinness.

P&G has designed value propositions that promote product characteristics, such as shampoo and dental paste branding and chemical components globally, while localized product packaging.

The company has crafted a careful strategy for each local market, especially in diverse emerging markets like China. “[P&G] entered China in the 1980s and first developed a distribution network for shampoo,” writes Edward Tse in The China Strategy. “Then P&G added other products one by one, building on its experience both in reaching markets across the country and running marketing campaigns to support the launch of each new category of goods.”

Yum! Brands (NYSE:YUM) has designed Pizza Hut and KFC menus that include both a global and a local component. This is especially the case for China, YUM’s largest overseas market. “Like Procter & Gamble, KFC spent a long time—nearly a decade—figuring out its basic model, which gave it the foundation it needed to embark on its rapid restaurant rollout in its second decade in China,” writes Tse in The China Strategy. “KFC deliberately adopted products and practices that would mesh well with inherent qualities of the Chinese markets it was trying to reach.”

The bottom line: Winning in a diverse world market takes three different value propositions, one for each segment: A universal value proposition for the pure global segment; a customized value proposition for the localized segment; and a hybrid value proposition for the semiglobal segments.

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